EDI HC 252

Code Sets

Each year, in the United States, health care insurers process over five billion claims for
payment. For Medicare and other health insurance programs to ensure that these claims
are processed in an orderly and consistent manner, standardized coding systems are
essential. The HCPCS Level II Code Set is one of the standard code sets used for this
purpose. The HCPCS is divided into two principal subsystems, referred to as level I and
level II of the HCPCS. Level I of the HCPCS is comprised of CPT (Current Procedural
Terminology), which is a numeric coding system maintained by the American Medical
Association (AMA). The CPT is a uniform coding system consisting of descriptive terms
and identifying codes that are used primarily to identify medical services and procedures
furnished by physicians and other healthcare professionals. These health care
professionals use the CPT to identify services and procedures for which they bill public
or private health insurance programs. Decisions regarding the addition, deletion, or
revision of CPT codes are made by the AMA. The CPT codes are republished and
updated annually by the AMA. Level I of the HCPCS, the CPT codes, does not include
codes needed to separately report medical items or services that are regularly billed by
suppliers other than physicians.

Level II of the HCPCS is a standardized coding system that is used primarily to identify
products, supplies, and services not included in the CPT codes, such as ambulance
services and durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS)
when used outside a physician's office. Because Medicare and other insurers cover a
variety of services, supplies, and equipment that are not identified by CPT codes, the
level II HCPCS codes were established for submitting claims for these items. The
development and use of level II of the HCPCS began in the 1980s. Level II codes are also
referred to as alphanumeric codes because they consist of a single alphabetical letter
followed by four numeric digits, while CPT codes are identified using five numeric
digits.

1/19/2022